Your personal finances can be as easy or complicated as you'd like them to be. Similar to many parts of our lives taking the easy way out can give the least desirable results however without goals how do you know what your result means?
They say that if you don't have a direction any road will get you to your destination and the same can be said about your finances. This is the key reason why goals are important to your personal finances.
If you don't set goals for your finances; the potential consequences include:
- You could spend more than you earn on stuff that you don't like to impress the people who don't matter
- When the unexpected happens and it will you will not be prepared
- You're like to live life on other people's terms rather than setting your own clear direction
The importance of goals for your money
What gets measured gets better and here is the importance of goals:
- It will give you direction on where you are spending your money and if this reflects your values
- You'll be able to plan for family, holiday and education expenses
- This will give you the added benefit of communicating in your personal / professional relationships due to clearer goal setting capability
- Generally studies suggest if you write goals down it improves the likelihood of success
- Goals give you the flexibility of choice and the ability to increase the "control" of your life
While goals are great, they can be difficult to maintain, especially for the young where there are a lot of moving parts. A key part of goal setting is the capability to change course. For this reason generally 90 day intervals or 4 times a year is a great time to review those finance goals.
Having a vision for the longer term or three specific goals i.e. buying a house / car etc is a financial goal you could set, which can then have a $ amount assigned to it.
The most important part of the goal is that it needs to be relevant and something you actually want. We won't include the SMART goals here as I'm sure you've heard that one before.
What are some financial goals you're looking to set for 2016? What is going to stop you and what do you feel you need help with?
We'd love a comment and let us know what you'd like to know!
Live your Money Glee! :)